Corporate Ethics and the Lead by Example
13 Feb 2019, Bachir El Nakib
Ethics are the principles and values used by an individual to govern his or her actions and decisions. ... An ethical organizational culture consists of leaders and employees adhering to a code of ethics.
The corporate scandal landscape is littered with important examples of governance failures surrounding corporate ethics and mishandling of harassment and sexual assault controversies. Major corporate governance failures surrounding the handling of these issues have occurred at Google, CBS (Les Moonves), U.S. Gymnastics team, and U.S Congress, just to name a few of the many.
If there was ever a compelling argument for ethics and compliance professionals to reiterate the importance of a culture of ethics, now is the time. Companies have to recognize that promoting and managing their cultures is one of several important measures to prevent and detect improper sexual harassment and assault incidents from occurring.
A company has to demonstrate its commitment to its code of conduct by words and by action. Protecting a company’s culture cannot be accomplished by avoiding legal and compliance issues – the goal should be set higher: a corporate conduct standard of personal conduct that treats individual employees with respect and dignity. That is not too much to require – it is a basic standard that companies can (and should) achieve.
Google suffered serious reputational and business harm when its staff around the world staged an unprecedented series of walkouts to protest the company’s treatment of women. In particular, Google was mishandling allegations of sexual misconduct and providing hefty severance payouts to executives who were forced to leave Google in response to credible allegations of sexual misconduct. According to a New York Times press report, there were 48 other incidents of sexual misconduct at Google that resulted in the departure of various employees without any serious payouts. Notwithstanding the obvious sensitivity and significance of these incidents, Google mishandled failed to react and to address an toxic culture that needed to be remediated. If you want a perfect example of a head-in-the-sand governance failure, Google is one of many that can be cited.
To address this significant risk, companies have to proactively address the handling of sexual misconduct issues before potential harm to a company’s culture. This requires a commitment to the issue and corporate board and senior management involvement.
As you would expect, a company’s commitment begins with the board and senior management communications and conduct. In this respect, companies have to revisit their policies and procedures, promote diversity initiatives, workplace conduct expectations, conduct new and innovative training programs and foster a speak up culture where concerns and incidents are reported to supervisors and employee concern avenues.
An important aspect of the controversies has been a failure to act on the part of senior management in response to serious concerns about senior executive conduct, and a lack of organizational justice surrounding the investigation and resolution of any sexual misconduct incidents. In this respect, a robust investigative protocol has to be documented, communicated and scrupulously followed to ensure that incidents are properly investigated and reviewed.
It is critical in this area in particular for companies to create and empower an independent committee at the senior executive level of relevant officers to review, monitor and ultimately resolve allegations and incidents of sexual misconduct.
As demonstrated in numerous high-profile incidents, companies have failed to exercise proper oversight, investigation and consistent resolutions involving senior executive misconduct, particularly in comparison to other violators who commit sexual misconduct at supervisory and employee levels. This disparate treatment of violators who engage in sexual misconduct has a corrosive impact on a company’s culture.
Another significant problem is the unwillingness of companies to acknowledge and address sexual misconduct issues. As allegations of sexual misconduct increase and are substantiated, companies have to recognize the need for comprehensive remediation and resources needed to address the problem.
Violators have to be held accountable, disciplined and terminated, when appropriate. Violators cannot be rewarded with large severance payouts or hush agreements among corporate managers and board members.
These comprehensive solutions should be implemented as quickly as possible, and perhaps even adopted as a proactive, best practice to prevent any problems from occurring. This issue has to be addressed early and proactively in order to protect a company’s culture.
As part of a new proactive strategy, senior leaders, supervisors and spokespersons have to emphasize the importance of reporting alleged incidents, and a commitment to investigate and hold those violators accountable. The infrastructure – policies, controls, resources and transparency – are essential requirements for such a strategy to succeed.